A European Union summit focused on the fate of Ukraine looks likely to become a debacle after President Viktor Yanukovych ordered the suspension of preparations for a historic pact between Kiev and Brussels aimed at shifting the country out of the Kremlin's orbit.

The announcement signalled that the tug-of-war between Europe and Russia for the future of Ukraine has swung in favour of Moscow. Following talks between the Russian and Ukrainian prime ministers, a government decree abruptly suspended preparations for the signing of a trade pact and political association agreement between Ukraine and the EU at a summit next week in Lithuania.

Vladimir Putin's spokesman said Russia welcomed the move. "We welcome the desire to improve and develop trade and economic co-operation," Dmitry Peskov told reporters. He called Ukraine a "close partner" and said Russia would respect any decision it made about the EU deal.

Yanukovych's Party of the Regions did not vote on any of the six bills, condemning them to failure, amid calls of "shame", "scandal" and "treason" from the pro-European opposition, which is planning a big demonstration in Kiev this weekend in favour of Ukraine's "European option".

Yanukovych's brinkmanship came as a humiliation for Stefan Füle, the EU commissioner for enlargement, who went to Kiev for talks with the president before the vote. "I am encouraged to see the determination of the president in co-operation with all parliamentary factions to adopt key legislation on 21 November," said Füle before the fiasco in parliament.

According to reports in Kiev, Yanukovych told Füle that he was not prepared to sign the pact with the EU in Vilnius, potentially setting back by years the country's prospects of quicker integration with the EU.

At stake is a trade agreement and a political association deal stemming from 2005 when the EU launched its eastern neighbourhood policy, which offered trade and political benefits to post-Soviet states traditionally falling within Moscow's orbit. The policy falls short of offering eventual membership of the EU or negotiations to join.

Moldova and Georgia are expected to sign agreements with the EU in Vilnius. Armenia, under strong Russian pressure, has already dropped its European ambitions in favour of joining the Kremlin's Eurasian customs bloc. But of the four countries, Ukraine is the main prize because of its size, geography and history.

Putin, who appears to view the contest for Ukraine as a zero-sum game between Russia and the west, has been tightening Russia's trade screws on Ukraine and the other countries, and the Moscow media are issuing daily warnings of the bleak future facing Ukraine should it risk turning westwards.

The main terms for a breakthrough concern what the EU calls an end to "selective justice" in Ukraine, meaning that the courts and the judiciary are no longer manipulated for political and business reasons.

The touchstone for these criteria is the fate of Tymoshenko, with Germany insisting she be allowed to leave the country. Others such as France and Poland argue that the prospects for such a geostrategic shift in Russia's backyard should not be tied to the fate of a single individual.

"The future of EU-Ukraine relations remains very unclear," said Hannes Swoboda, leader of the social democrats in the European parliament, before Ukraine announced it was freezing preparations for the pact with the EU.

"The parliamentary decision raises profound doubts about how serious Ukraine's commitment to the EU really is. We deplore the pressure and blackmailing tactics that Russia has used against Ukraine and other countries. It is equally deplorable that Ukraine seems to have given in to this pressure."

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